Exhibit 99
Infinity Property and Casualty Announces 102% Increase
in Net Earnings for the Second Quarter
BIRMINGHAM, Ala., July 27 /PRNewswire-FirstCall/ -- Infinity Property and
Casualty Corporation (Nasdaq: IPCC), a national provider of personal
automobile insurance with an emphasis on nonstandard auto insurance, today
reported that second quarter net earnings increased 102% compared to the
second quarter of 2003. Net earnings for the second quarter of 2004 were
$24.8 million or $1.19 per share, on a fully diluted basis, compared to net
earnings of $12.3 million or $0.60 per share for the second quarter of 2003.
For the first six months of 2004, net earnings were $41.8 million or $2.00 per
share, as compared with $23.8 million or $1.16 per share for the same period
in 2003.
Operating earnings, a non-GAAP measure, were $23.9 million or $1.15 per
share for the second quarter of 2004 compared to $12.1 million or $0.59 per
share for the second quarter of 2003. For the first six months of 2004,
operating earnings were $39.8 million or $1.91 per share, as compared with
$23.5 million or $1.14 per share for the same period in 2003. Operating
earnings is defined at the end of this release and reconciled to net earnings,
the most comparable GAAP measure.
Underwriting income, a non-GAAP measure, was $25.4 million and
$43.5 million in the second quarter and first six months of 2004,
respectively. By comparison, $12.9 million and $22.5 million of underwriting
income was earned in the second quarter and first six months of 2003,
respectively. Infinity produced a GAAP combined ratio in the second quarter
of 88.3%, compared to 92.2% in the second quarter of 2003. For the first six
months of 2004, the GAAP combined ratio was 89.9% compared to the 93.2% in the
first six months of 2003. Underwriting income is defined at the end of this
release and reconciled to net earnings, the most comparable GAAP measure.
Net written premiums for the quarter ended June 30, 2004 were
$218.7 million compared with $169.8 million for the same period in 2003. Net
written premiums for the first six months of 2004 were $460.9 million, a 16.3%
increase over the $396.2 million in net premiums for the first six months of
2003. The increase in net written premiums in the second quarter and first
six months of 2004 compared to the second quarter and first six months of 2003
is largely attributable to the reduction in the auto physical damage ceded
premiums from 90% in the first six months of 2003 to 10% in the first six
months of 2004. Excluding the auto physical damage quota share, net premiums
written in the second quarter and first six months of 2004 were $226.5 million
and $470.3 million, respectively compared to $249.5 million and $562.5 million
for the same periods in 2003.
Gross written premiums in Infinity's five franchise states of California,
Connecticut, Florida, Georgia and Pennsylvania, which accounted for 80% of
gross written premiums in the second quarter of 2004, were $183.6 million
compared with $188.6 million for the same period in 2003. Premiums in the
franchise states for the first six months of 2004 were $387.5 million compared
to premiums of $384.1 million for the first six months of 2003.
"We are very pleased with our continued improvement in both our
underwriting results and net earnings," states James Gober, Infinity's
Chairman, President and CEO. "We recognize, however, that our superior
underwriting results must be accompanied by growth. While we are disappointed
that this growth was not achieved in the second quarter, we are confident that
the groundwork has been laid for meaningful growth in the remainder of the
year with the rollout of new products in several key states, new agency
appointments, intensified marketing campaigns and a variety of attractive
agency incentives."
2004 Earnings Guidance
As a result of strong second quarter results and the improved outlook for
the remainder of the year, Infinity is increasing its 2004 operating earnings
guidance to a range of $3.45 to $3.65 from a range of $2.90 to $3.10.
Forward-Looking Statements
This press release contains certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements in this press release not dealing with historical results are
forward-looking and are based on estimates, assumptions and projections.
Statements which include the words "believes," "expects," "may," "should,"
"intends," "plans," "anticipates," "estimates," or the negative version of
these words and similar statements of a future or forward looking nature
identify forward looking statements. Examples of such forward looking
statements include statements relating to Infinity's expectations concerning
market and other conditions, future premiums, revenues, earnings and
investment activities, expected losses and rate changes.
Actual results could differ materially from those expected by Infinity
depending on certain risks and uncertainties including but not limited to
changes in economic conditions and financial markets (including interest
rates), the adequacy or accuracy of Infinity's pricing methodologies, the
presence of competitors with greater financial resources and the impact of
competitive pricing, the ability to obtain timely approval for requested rate
changes, judicial and regulatory developments adverse to the automobile
insurance industry, the outcome of pending litigation against Infinity,
weather conditions (including the severity and frequency of storms,
hurricanes, snowfalls, hail and winter conditions), changes in driving
patterns and loss trends and acts of war and terrorist activities. Infinity
undertakes no obligation to publicly update or revise any of the forward-
looking statements. For more detailed discussion of some of the foregoing
risks and uncertainties, see Infinity's filings with the Securities and
Exchange Commission.
Conference Call
The Company will hold a conference call to discuss 2004 first quarter
results at 11:00 a.m. (ET) today, July 27. There are two alternative
communication modes available to listen to the call. Telephone access will be
available by dialing 1-800-237-9752 and providing the confirmation code
42191257. Please dial 5 to 10 minutes prior to the scheduled start time. A
replay of the call will also be available one hour following the completion of
the call, at around 1:00 p.m. (ET), and will run until 8:00 p.m. on Tuesday,
August 3, 2004. To listen to the replay, dial 1-888-286-8010 and provide the
confirmation code 91445302. The conference call will also be broadcast live
over the Internet. To listen to the call via the Internet, go to Infinity's
website, http://www.ipacc.com , click on Investor Relations and follow the
instructions at the webcast link. The archived webcast will be available on
Infinity's website approximately one hour following the completion of the call
and will be available for one year.
Infinity Property and Casualty Corporation
Statement of Earnings
(in millions, except EPS)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Income:
Earned Premiums $218.8 $165.9 $429.1 $331.4
Investment Income (1) 17.1 13.4 33.1 27.6
Realized Gains 1.4 0.2 3.0 0.5
Other (2) 1.1 0.8 3.3 1.8
238.4 180.3 468.6 361.3
Expenses:
Loss, Loss Adjustment
and Underwriting
Expenses 193.4 153.0 385.5 308.9
Interest Expense 2.7 1.2 5.1 2.4
Other (3) 5.1 7.5 15.4 13.8
201.1 161.7 406.0 325.0
Income before Taxes 37.3 18.7 62.6 36.3
Income Taxes 12.4 6.4 20.8 12.5
Net Earnings $24.8 $12.3 $41.8 $23.8
Net Earnings per Share
-- Basic $1.21 $0.60 $2.03 $1.17
Weighted Average Shares
-- Basic 20.565 20.347 20.549 20.347
Net Earnings per Share
-- Diluted $1.19 $0.60 $2.00 $1.16
Weighted Average Shares
-- Diluted 20.857 20.586 20.861 20.503
*columns may not foot due to rounding
Notes:
(1) Investment income for the three months and six months ended June 30,
2004 increased primarily due to a reduction in interest paid under
the auto physical damage quota share, as well as an increase in the
average invested assets balance as a result of the term loan
offering.
(2) Other income for the six months ended June 30, 2004 includes a
$1.1 million pre-tax gain from the sale of a building in Dallas, TX.
(3) Other expense for the six months ended June 30, 2004 includes a
$3.4 million pre-tax loss from the write-off of unamortized debt
issue costs as well as a $0.7 million pre-tax loss resulting from the
sublease of excess office space.
Infinity Property and Casualty Corporation
Condensed Balance Sheet
(in millions, except book value per share)
For the Period Ended
June 30, March 31,
2004 2004
Assets:
Cash and invested assets (1) $1,398.8 $1,446.5
Other assets 506.9 497.6
Total assets $1,905.7 $1,944.1
Liabilities and Shareholders' Equity:
Unpaid losses and loss adjustment expenses $680.0 $696.7
Unearned Premium 387.7 389.2
Long-term debt 199.3 199.3
Other Liabilities 157.3 169.7
Total Liabilities 1,424.3 1,454.8
Total shareholders' equity (2) 481.4 489.3
Total liabilities and shareholders' equity $1,905.7 $1,944.1
Shares Outstanding 20.565 20.565
Book Value per Share $23.41 $23.80
*columns may not foot due to rounding
Notes:
(1) The decrease in cash and invested assets from March 2004 is primarily
from changes in the market value of the fixed income portfolio as a
result of a general increase in market interest rates.
(2) A decrease in unrealized capital gains of $32.1 million resulting
from a general increase in market interest rates offset by net
earnings of $24.8 million resulted in the decrease in shareholder's
equity from March 2004.
Definitions of Non-GAAP Financial and Operating Measures
Operating earnings are defined as net income, before realized gains and
losses and the cumulative effect of a change in accounting principle, after
tax. Infinity reports this non-GAAP measure because realized gains and losses
can be volatile and because it is a measure used often by investors in
evaluating insurance companies. Net earnings are the most comparable GAAP
measure.
Underwriting income measures the insurer's profit on insurance sales after
all losses and expenses have been paid. It is calculated by deducting loss
and loss adjustment expenses and underwriting expenses from premiums earned.
Infinity reports this non-GAAP measure to show profitability before inclusion
of investment income or taxes and because it is a measure used often by
investors in evaluating insurance companies. Net earnings are the most
comparable GAAP measure.
Below is a schedule that reconciles operating earnings and underwriting
income, both non-GAAP measures, to net earnings:
For the Quarter For the Six Months
Ended June 30, Ended June 30,
(in millions, except EPS)
2004 2003 2004 2003
Premiums Earned $218.8 $165.9 $429.1 $331.4
Loss, Loss Adjustment
and Underwriting
Expenses 193.4 153.0 385.5 308.9
Underwriting Income 25.4 12.9 43.5 22.5
Investment Income 17.1 13.4 33.1 27.6
Other Income 1.1 0.8 3.3 1.8
Interest Expense on Debt (2.7) (1.2) (5.1) (2.4)
Other Expense (5.1) (7.5) (15.4) (13.8)
Pre-Tax Operating Income 35.8 18.5 59.5 35.8
Income Tax Expense 11.9 6.3 19.8 12.3
Operating Earnings,
after-tax 23.9 12.1 39.8 23.5
Realized Gains 1.4 0.2 3.0 0.5
Income Tax Expense 0.5 0.1 1.1 0.2
0.9 0.1 2.0 0.3
Net Earnings $24.8 $12.3 $41.8 $23.8
Operating Earnings
per Share -- diluted $1.15 $0.59 $1.91 $1.14
Net Realized Gains 0.04 0.01 0.09 0.02
Net Earnings Per Share
-- diluted $1.19 $0.60 $2.00 $1.16
*columns may not foot due to rounding
Infinity also makes available an investor supplement on our website. To
access the supplemental financial information, go to www.ipacc.com and click
on "Investor Relations" followed by "Quarterly Reports".
SOURCE Infinity Property and Casualty
-0- 07/27/2004
/CONTACT: Roger Smith, Chief Financial Officer of Infinity Property and
Casualty, +1-205-803-8188/
/Web site: http://www.ipacc.com/
(IPCC)
CO: Infinity Property and Casualty
ST: Alabama
IN: INS
SU: ERN ERP CCA MAV